As President Obama and Democrats in Congress continue their push to overhaul the nation’s health care system this year, it’s turning out that their biggest obstacle is not Republicans, but each other.

The dilemma is simple: moderate Democrats see the need to scale back legislation, but liberals yearn for something bolder. The evolving dynamic is similar to the one that ultimately killed comprehensive immigration reform during the Bush administration when Republicans tried to compromise to win over Democrats, but incurred the wrath of conservatives in the process.

The key sticking points on health care involve whether at a time of unprecedented debt, the nation can absorb the massive cost of insuring everybody, and whether Congress should create a new government-run plan, which proponents call the “public option.”

In recent weeks moderate Democratic Sens. Mary Landrieu and Joe Lieberman came out opposed to the government-run option, while fellow Democratic Sens. Kent Conrad and Dianne Feinstein have publicly said that there aren’t enough votes in the Senate to pass such a plan.

Another moderate Democrat, Sen. Ben Nelson, told the Hill that “There is a risk of not doing anything by trying to do too much.” He added, “I think there is going to be a narrowing-down as time goes on.”

Yet while a pared down piece of legislation could satisfy moderate Democrats and maybe even win over a few Republicans, many liberals view that as an unacceptable outcome. From their perspective, legislation centered on providing subsidies for individuals to purchase private insurance is not genuine reform, but merely a case of pouring more money into a broken system.

“I will not vote for any health care that does not include a public option,” Democratic Rep. Keith Ellison declared this week. “I will not do it, that's a guaranteed no vote and I will not be dissuaded from that.”

Ellison is not alone. He’s a part of the House Progressive Caucus, whose co-chair, Rep. Lynn Woosley, has said repeatedly that a majority of the 80-member bloc would not vote for any bill that did not include a “robust” government-run plan, which typically means one modeled after Medicare. This is the formulation that is opposed most vigorously by the American Medical Association because it would drive down reimbursement rates for doctors, and by insurers who do not believe they would be able to compete with a government plan that had access to tax dollars and would benefit from the fact that government would be writing the rules of the game.

If Woosley is serious about liberal House members voting against a compromise bill, that means scaled-back legislation could die in the House even if some Republicans defect and vote for it. And on the flip side, should the House go ahead and pass a bill with a strong government-run plan, it would have a tough time getting the necessary votes in the Senate.

As a result, instead of attacking Republicans, liberal activists have focused their strategy on pressuring a handful of moderate Senate Democrats who hold the keys to health care legislation.

“Self-appointed spokespeople like Senator Feinstein and Senator Conrad [have been] lately saying, ‘Well, it’s a matter of getting enough Democratic votes,’” Roger Hickey, co-director of the activist group Campaign for America’s Future, explained on a Tuesday conference call. “They are the Democratic votes that we need to step up and pass this.”

Robert Reich, former Labor Secretary during the Clinton administration, suggested on the call that “it’s important for the President to make it crystal clear to Democrats and Republicans alike that he will not sign a bill that does not have a public option in it.”

On Thursday, thousands of liberal activists gathered in Upper Senate Park on Capitol Hill to rally for the passage of health care legislation, and attendees heard speeches from a number of lawmakers and Sopranos star Edie Falco, who asked them to keep up the fight for the government plan.

The crowd waved signs such as “Health Care, Not Profits” and “Affordable: Yes/Premiums: No.” At one point, they sung a ditty, “We Want Health Care,” to the tune of Queen’s “We Will Rock You.”

“We’re counting on you to go across the street, and convince, and persuade, and cajole and do whatever you need to do to get a strong public option,” Democratic Sen. Sherrod Brown hollered, the Capitol dome behind him.

As Democratic Sen. Chuck Schumer gave a rousing speech urging the crowd to hold lawmakers’ “feet to the fire” to make sure they support a government-run plan as an option, a man with a bullhorn heckled, “Sen. Schumer, put single-payer back on the table, now!”

To single-payer advocates, preserving for-profit insurance in any form would be inefficient because the system would remain too fragmented.

“It’s very clear that as long as you keep the health insurance fox guarding the hen house of health care, you won’t have real reform,” said James J. Walsh, a member of Physicians for a National Health Program, who drove from Morganton, North Carolina, to attend the event.

The strong presence of single-payer advocates suggested that even among liberal activists, there are clear divisions over how to approach health care.

Howard Dean, who has been leading a national drive for a health care bill that includes a government plan, was also on hand. Before he spoke to the crowd, he told TAS in an interview that it didn’t make sense to spend $1 trillion on a health care bill that didn’t insure everybody or create a government alternative.

“If you want health care reform, you should do health care reform, and a bill that doesn’t have a public option in it is not health care reform,” Dean said.

He insisted that the plan would have the votes in the Senate. “Look, when 72 percent of the American people want something, they’ll be enough votes for it,” he said, referring to a recent New York Times/CBS poll.

But a Washington Post/ABC poll released Wednesday found that when respondents were told that some insurers would go out of business if a government-run plan passed, support for the provision dropped to 37 percent.

Thursday’s event was organized by Health Care for Americans Now, a coalition of unions and liberal groups such as MoveOn.org, ACORN, and the National Council of La Raza, who plan to spend $82 million to push their agenda.

As part of the effort, MoveOn.org released a new ad Thursday blasting Feinstein for noting the difficulty of winning enough votes to pass health care legislation.

The other factor that may determine the success of health care reform is the pesky financing issue. President Obama has promised that any health care legislation will be deficit-neutral, but so far, the Congressional Budget Office has been critical of Democratic efforts. Last week, the CBO determined that a just a portion of a bill produced by Ted Kennedy’s Senate Health, Education, Labor and Pensions Committee would add $1 trillion to the deficit. It later slapped a $1.6 trillion price tag on a draft of the Senate Finance Committee bill, forcing chairman Max Baucus to delay the bill so that he could chop its cost by $600 billion.

The problem is that every revenue-raising measure being considered makes some contingent of people unhappy. President Obama proposed limiting the charitable contributions deduction for wealthy Americans, but that dropped like a lead balloon in Congress. Senate Democrats are considering limiting the employer tax exclusion on health insurance, a huge pot of money, but President Obama attacked John McCain during last year’s campaign for proposing it, and unions remain strongly opposed.

Gerald McEntee, President of the American Federation of State, County, and Municipal Employees (AFSCME), warned at Thursday’s rally that any attempt to tax employee health benefits would “turn good people against great reform.”

In the coming months, President Obama will face the most difficult legislative test of his young presidency. If he wants to get health care legislation done this year, at some point, he’s either going to have to convince moderate Democrats to abandon their reservations over the price tag and the creation of a government plan, or he’ll have to get liberals to settle for less. If both sides dig in, health reform will go down in flames once again, and Democrats won’t be able to pin the blame on Republicans.

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